Top 12 Factors of Fast Lube Success: Part III
Editor’s note: To read Part I of Haggard’s “Top 12 Factors of Fast Lube Success,” make sure to check out the July 2015 issue of NOLN and to read Part II, check out the August 15 issue of NOLN.
9. Building design and equipment
Choosing equipment and tools is a major decision for a newcomer to the business because once they’re installed, they’re difficult to change. I would make the following recommendations:
a. Have two small compressors rather than one big compressor. Air consumption is not very high, but it is essential. When one compressor is down for maintenance the second will keep you going.
b. The bulk waste oil tank can be located anywhere on the property. Have a shallow drain pan fabricated locally with a continuous drain hose into a 30-gallon pressure tank in the basement. When needed, apply air pressure in the top of the tank to push the oil out the bottom and piped to the top of the bulk tank wherever located. With this system the bulk tank can be located so the waste oil truck doesn’t block your driveways during pick-ups.
c. If constructing a new building, plan it in steps. Consider, “What services will I be performing?” and “What equipment and piping do I need?” Finally, “Where will I store stuff?” Then design the roof and walls to surround it. By planning the job, equipment and storage first, appropriate space will be allocated and much of the piping can be concealed.
d. Slope the floors with appropriate drainage. (It’s tough to scrub down a level floor.)
e. Don’t use underground tanks. They corrode through and create big problems; 550 gallon, vertical, aboveground tanks are sufficient and can be installed in a tank room alongside the building at ground level. A two-foot solid pour wall surrounding the tanks should keep the EPA happy, and the tank room is a good place to put the air compressors to minimize noise level at the entry point.
f. Have a vent system for the basement. Four-inch PVC pipe routed up through the walls to a “squirrel cage” fan mounted in the overhang, exhausting through the soffit works fine. Gas vapors travel down, so the vent outlets should be at the lowest level of the basement.
g. Have a vacuum pump with a holding tank piped to both the console and basement workstations. A vacuum is essential for evacuating differentials, gearboxes, transmissions and over-fills. The holding tank can be relatively small if mounted on top of the waste oil tank and plumbed to drain into it. Check the valves to make sure they’re the flapper type, so there is no resistance to flow.
h. Quarter-turn valves are recommended for use throughout because their on/off position can be determined visually and they require less maintenance.
i. Have every tool imaginable close at hand at every workstation. If a tool will save five seconds, it’s worth having. In the overall scheme of things, tools cost almost nothing and generally last forever. Keep them from growing legs by having a screw up/bonus fund. Set aside an amount and use it to pay for things like mistakes, comebacks or missing tools. If you have no such expenses, pass it to the crew every month as a bonus for doing good work.
j. Forget dispensing reels. A console dispensing system is the only logical way to handle all those nozzles. The hoses drape down into the basement and gravity returns them nicely. No moving parts, no seals, no springs and no maintenance, plus a much lower cost. If you don’t have a basement, wall-mounted consoles can be fabricated with the meters installed in the cabinetry and hoses draped inside and functioning similar to a gas pump hose. If space is a problem, realize that the meters can be mounted in the cabinetry and 3/8-inch hose with small control valves used for dispensing. The limiting factor for oil flow is the small orifice in the meter, and the meter doesn‘t have to be at the nozzle. Dispensing rates with 3/8-inch hose will be the same as using the 1/2-inch hose commonly used, but when space is a concern they are more flexible and take up less space.
k. It’s worth having a battery charger mounted at the console or readily available to jump start those cars with batteries that mysteriously die when you are ready to send them on their way.
l. Have attractive floors that are skid-resistant, durable and easy to scrub. There are numerous options. Just realize that very few people look up at your ceiling, but everybody sees your floors.
m. Have a generous roof overhang. It protects the walls and allows space for vent fans, lighting fixtures and surveillance equipment. Wall signage is protected and lasts much longer. Consider extending the overhang to cover the entry zone to provide shade for those waiting in line.
n. Have the biggest signage permitted, and keep it and your exterior lighting on past midnight. You will have better security, and those driving by will know you exist.
Most every city restricts the size and type of signage, but some exempt what is placed on the building’s walls. A typical wall with a generous overhang for lighting may give you an inexpensive billboard-sized sign.
o. Design storage space in the building so the customer only sees the displayed products or things needed for the job. Cleaning gear, landscaping tools, motorcycle helmets, mop buckets and such clutter should be stowed out of sight.
p. Think about motorhomes when considering door openings and driveways. Motorhomes are lucrative because many others aren’t equipped to service them.
10. Package deals
Package deals make it easier for the customer to say yes to add-on services. They are a win/win situation because more value can be offered while increasing the overall net profit for the job.
This is why a carwash/fast lube is such a formidable player in the industry. The expenses in a carwash are primarily prorated costs of real estate, equipment, payroll and taxes. The product cost is very little, so a carwash can be packaged in with an oil change service, substantially increasing the value to the customer with little additional cost to the operator.
The principle applies to most all add-on services at a fast lube. There is little net profit in an oil and filter change, but if the customer also opts for a differential fluid change, air filter, PCV valve and breather, the total net profit can be substantially increased while discounting the individual services.
The biggest advantage for offering packages of service is the menu and signage can do most of the selling, and the greeter need only promote the one package as opposed to doing a presentation for each individual item. Four-wheel-drive vehicles with multiple gear boxes can make for lucrative tickets. A total filter package of air filter, cabin filter, breather and PCV valve thrown in free can produce substantially more net than an oil and filter change, and they are all manufacturer recommended services.
Give each package an emotion catching name. There is a reason cars are named Mustang, Barracuda, Corvette and Regal. It works for package deals, too. Try, “Off Road Sportsman” for a fluid change in every gearbox for a Jeep. Try, “VIP service” for luxury car owners. Maybe try a “Birthday Bash,” a package of everything you do marketed with a pre-paid ticket and bouquet of flowers for customers on their birthday.
11. Be the best, and charge an appropriate price
An interesting revelation comes with massaging the numbers for a fast lube. Determine from your previous year’s tax return the bottom line net profit you made after all expenses. Divide that number by the total number of cars you serviced to determine your net profit per car. The point of all this is to now ask yourself, “How much would I have to increase the charge price to double my net profit?” My guess is that it will be a surprisingly small amount, an amount that will be hardly noticeable by the customer.
Fast lube owners tend to be acutely aware of the costs of product, labor and overhead and what their competitors charge. Take a mental break at this point and ponder these questions. “What is the exact cost of getting a suit dry cleaned?” “What does a candy bar cost?” “How much will the restaurant tab be tonight for two of you to go out for dinner?” You don’t know, do you? These are services or products you may well purchase in the near future, but as I would, you probably mentally thought of an acceptable range, perhaps eight dollars to 12 dollars for the suit cleaning, 75 cents to one dollar for the candy bar and around 50 to 60 dollars for dinner.
Your customers think with the same mind set. They think in terms of an acceptable range. In today’s market, 34 dollars for an oil and filter change isn’t going to create a mob rushing to your store and a price of 39 dollars and 95 cents isn’t going to drive your regulars away. As long as the price is “in the range,” it is not a factor in determining your business volume. Your customers are coming to you because they like you or the way they are treated. Or they are coming to you because you are most convenient or they perceive you are the most competent. Price is way down the list as to why they are there. Your showmanship, your highly trained and well groomed crew, your dialogue and the attitudes perceived are the reasons they come. Why not charge the top end of the range and maximize your bottom line?
Attract customers with quality, not pricing. There will always be a market for Rolex watches and Lamborghini automobiles because of the perception of quality. Few buyers really know the internal workings of the highest priced products. The price validates the perception of quality. To convince your customers your service is the best available, you must charge the highest price.
Customers who seek quality over price tend to purchase more add-on services because they care more about their vehicle than those who are more concerned with pricing. Their vehicles are generally in better condition and easier to service. Once the best is found, they tend to become regular customers more so than bargain hunters because price just doesn’t matter as much. They respond more to showmanship and personal attention.
Being the best in town requires the most highly trained crew. Train someone to change the oil and filter and you will generate the income of oil and filter changes. Teach them how to relate to others for the most favorable perceptions and how to appeal to the psychological instincts of the customer and how to sell service and you will reap the much higher profits of selling the sizzle.
Think about training costs the same way you think about buying hand tools. There is an initial cost, but it is an investment that reaps rewards over a long period of time. Proper training results in team loyalty, less turnover, higher sales, fewer comebacks, fewer accidents and many more satisfied customers.
Lube tech training should be a formalized course of at least 40 hours, with exams and a diploma. A new-hire should not be placed on the line until fully qualified for the position. No customer wants a trainee working on his or her car. Conduct the shop training on an unused bay or after hours using employee vehicles.
The worst way to train is to put a new-hire with another lube tech to show him the ropes and allowing him to do it on customer cars. Imagine you are getting a blood test, and it’s going to be done by a new-hire trainee with a qualified nurse looking over their shoulder, and the new-hire is asking, “Is this where I stick the thing-a-ma-jig in?” That’s the same feeling a customer has when they hear two people under their car and one is saying, “Is this the right plug?”
Do your training in a classroom, an employee lounge, in the parking lot or your driveway at home — anywhere away from a paying customer’s car. It’s best if one employee — preferably the owner or manager — conducts all the training. That way everyone has a single source for all information and everyone is functioning with the same plan.
There should be a written operations manual used as a textbook so all training is oriented around the owner’s attitudes, goals and operating philosophy. In establishing a training schedule, I recommend 25 percent of the time be spent on how to perform the service, 25 percent on rehearsing the show and 50 percent on sales, showmanship and creating attitudes for providing exceptional customer service.
Those are the 12 most important factors I know. Promoting any single one isn’t an assurance of success. That’s the challenge and fun of owning a business. But I’ve always felt the shaved dice theory applies. If you shave a millimeter off a pair of dice, the outcome over time is definitely changed but not perceptively so. If you add a new service, say checking the pressure in the spare tire, the change in car counts may not be immediately obvious. But for every millimeter shaved off the dice, the odds of a specific outcome become more and more enhanced.
The more favorable things you employ, the better your odds of success. Always keep in mind a fast lube has a built-in time delay. Results of an improvement just don’t immediately occur. It happens in three to four months, the next time an oil change is due. Keep the faith, and think long term.
The fast lube industry has been good for my family and I. My wish for all operators is that you are successful, provide needed services and contribute to the economy of your community, coach a fast lube team with great memories and attain personal fulfillment in accomplishing your goals while serving all those around you.
JOE HAGGARD writes from a customer’s point of view and is a retired fast lube consultant. He welcomes comments at 352.861.1985 or via email: email@example.com